Protect them from themselves

A number of people in my commenters have come out in favor of food stamps not as a political expediency, but as a first best policy option because they force people to spend money on food that might otherwise have gone somewhere else. This comes in two varieties:

1) If I'm giving you my money, I damn well get to determine how you spend it

2) Poor people might make bad decisions with cash, so better force them to use it on food.

Both of these arguments are somewhat undone by the fact that food stamp recipients can always monetize their grants to some extent, by buying food and then exchanging it for cash. It's just that the process is extremely inefficient, and the sale will net much less than the full value of the food stamps.

More broadly, do I get to attach strings to the money you get from the government? If you have a mortgage, and deduct the mortgage interest, thus getting a hefty government benefit paid by those of us who are not homeowners, does this entitle me to go over to your house and make sure that you're not spending the money on something I disapprove of?

As to the second argument, I recognize an obligation to ensure that those who are genuinely incapable of earning a minimally decent living for themselves have the ready needed to secure the basics. I do not recognize an obligation on my part to ensure that they actually do so. Nor do I think that I am the best judge of what people need.

If people are genuinely so screwed up that when given enough money to buy what they need, they fail to purchase enough food to sustain life, then what they need is not food stamps, but 24 hour supervision. If people will buy alchohol or some other unnecessary instead of feeding their children, then they are probably neglecting their children in other ways requiring a stronger intervention than an EBT card. One could argue that right now, incomes are not high enough to purchase basic necessities (and indeed, I think the EITC should be increased, as I've said numerous times.) But that still doesn't make the case for food stamps for me; if the poor take money out of their food budgets to buy something else, it is presumably because they think they need that something even more than they need their next meal. Who am I to second guess them?

This has nothing to do with the appropriate level of spending on the poor, or even the structure. But assuming a basic basket of cash that we are prepared to spend on improving peoples' lives, it seems clear to me that none of that cash should be handed out in the form of food stamps.

Comments

If people are genuinely so screwed up that when given enough money to buy what they need, they fail to purchase enough food to sustain life, then what they need is not food stamps, but 24 hour supervision.

+1

Posted by Charlie (Colorado) | January 26, 2008 1:49 PM

What? You are still showing your face and discussing this?

On $3 dollars a day it is very difficult to buy healthy food. Your best bang for the buck in regards to calories are unhealthy and fatty.

Disregarding the $3 a day, pretty hard to do but just for instance, food stamps do not cover any fresh fruits. The only vegetable they cover is carrots, non-baby carrots.

Disregarding your ignorance in favor of ideological libertarian purity, do you ever think to look up some facts before you write? Do you really think they are given enough restricted food stamps to even eat healthy if they wanted to? When you have no qualifications whatsoever do you think you can put your opinion out disregarding all the stuff you can find just by googling on getting by on $3 a day and the causes of obesity among the poor? Have you never been shopping and realized that pasta is cheaper and more filling than healthy choices?

"Oh, I don't like looking at these unhealthy obese poor people. Quit giving them my tax money for food." - Megan "Marie Antoinette" McArdle

Posted by Gary Denton | January 26, 2008 2:14 PM

There seems to be a problem with your first argument about whether you should be allowed to attach strings to the money I get from the government for, say, a mortgage deduction.

(1) It's my money that the govt took away in the first place and is now returning to me. This seems materially different from a govt handout.

But more importantly,

(2) You have already attached the strings in deciding to return it to me. You told me I couldn't get it back unless I used it to finance a house. How is that different from telling the poor they can't have a handout unless they spend it on food?

Posted by Forestgirl | January 26, 2008 2:16 PM

If people will buy alchohol or some other unnecessary instead of feeding their children, then they are probably neglecting their children in other ways requiring a stronger intervention than an EBT card

Well the kids might as well have a good bowl of Count Chocula while waiting for the A-Team (rapid response team) to barge through the front door and save them.

"No more food stamps kids. It gov intervention time, Megan-style," says Mr.T as young Timmy plays with his bling.

Usually those who are buying alchohol or other unnecessary things ARE in fact neglecting their children in ways that deserve some massive intervention, but that is kind of not an answer to the question of whether food aid is worthwhile.

And it's foolish to talk of "enough food to sustain life". That's a libertarian fantasy phrase that is not reflective of American reality in that nobody here is really starving in a life or death manner. So we have to kind of move past that issue of only wanting to provide food for "Ethiopic" starvation situations.

The argument is not so much about adults making bad choices for themselves, but adults making bad choices for their children. And time and again, our social services entities across the country stumble upon familes, poor and otherwise, who have opted to not make the right decisions for those in their care.

The real world question is how you insure that kids have food on the table, or more food than normal, when the choice of increasing cash benefits may not result in food. I don't believe anyone has suggested food stamps are a first best policy option . They are just better than cash if you care about remotely putting food in the mouths of the young.

And the mortgage example is off. The equivalent situation is the government allowing a mortgage deduction, but instead of a house, you bought a BMW and called it a house, and deducted. It's the difference between using a program for what it's supposed to be used for, and fraud.

Posted by Finn | January 26, 2008 2:20 PM

Economically, these things are identical; there is no difference between giving you a tax credit (and thereby forcing me to pay higher taxes to cover the shortfall) or giving you money.

There are already strings attached to poverty grants, too: you have to have a very low income, which is pretty unpleasant. No one makes you spend the money you get back from the government on housing; you get money for doing something that you presumably would have done anyway, which is buying a house. (There's little economic evidence that the mortgage interest tax deduction increases homeownership rates; mostly, it seems to increase house prices and/or median home size). The question is, once you have gotten money from the government for fulfilling certain conditions, are we entitled to tell you how to spend it?

Posted by Megan McArdle | January 26, 2008 2:23 PM

Gary Denton,

You don't know what you're talking about. We've been over all this in other threads. Try reading this.

Posted by Mixner | January 26, 2008 2:27 PM

I am aware that Megan's main argument is that she just doesn't like food stamps. I don't like some of the stupid food stamp restrictions and part of what she says makes sense. But in her continuing series of posts on this occasionally her powdered wig slips a little.

http://www.sciencedaily.com/releases/2004/01/040105071229.htm

Posted by Gary Denton | January 26, 2008 3:23 PM

The purpose of the mortgage interest deduction is to encourage home ownership, and its usefulness towards that end isn't contingent on how the tax savings are spent*. Besides, as you pointed out, the main effect of the mortgage interest deduction is to drive up home prices, so we already know how home owners are speding the savings--by and large they're spending them on higher mortgage payments.

The purpose of welfare is to make sure that the poor have the basic necessities of life, and more importantly that their children do. This is contingent on how the money is spent.

*Okay, that's a lie. We both know it's really about pandering, but that's not contingent on how the tax savings are spent, either.

Posted by Brandon Berg | January 26, 2008 3:25 PM

I still think the mortgage/food stamp distinction is only one of chronology. In the case of mortgages, I spend the money first on something the govt has told me it approves of, and then I'm allowed to have it back. You've already told me how I'm allowed to spend it--you said I had to spend it on a mortgage.

It would be the same in the case of the food stamps if poor people had to buy food first, turn in their receipts, and then they could get their money back.

Posted by Forestgirl | January 26, 2008 3:25 PM

Gary Denton,

Well done. You found a report that supports what we all agree is true: calorie-dense foods tend to be cheaper per calorie than calorie-sparse foods. Now go read the other threads to learn why this is irrelevant to the issue.

Posted by Mixner | January 26, 2008 3:50 PM

Two points about food stamps that would seem to be right down Megan's alley:

First, the reason food stamps are a favorite of generations of congressmen doesn't have much to do with feeding poor people; it has to do with agricultural lobbies. If they help the poor (and they sure helped me when I was young, stupid and struggling!!!) it is a fortunate secondary effect.

Second, one reason they help the poor is that they are effectively an alternate currency. At the time and place we lived in poverty their street value was 50cents on the dollar.

Posted by JohnMcC | January 26, 2008 3:50 PM

Uhh...using debit-card accounting probably has some effect on the 'alternate currency' aspect of food stamps. I don't want to go back to using them to find out but I bet the poor folks I knew way-back-when would have figured out a way to sell their benefits if they wanted.

Posted by JohnMcC | January 26, 2008 3:57 PM

Sadly, or happily, that is no more. Food stamp grants are now on an EBT card, which is hard to trade.

In NYC, I seem to remember they traded at 70 cents on the dollar, but that was more than twenty years ago.

Posted by Megan McArdle | January 26, 2008 3:58 PM

The question is, once you have gotten money from the government for fulfilling certain conditions, are we entitled to tell you how to spend it?

1. As others have already mentioned and as seems pretty obvious, the government does already attach the incentive to a particular action. The only matter is one of chronology. Would a food rebate be much different, theoretically, than food stamps?

2. There should be a difference between how net productive citizens are treated and those who make claims on public charity. "Beggars can't be choosers." If a person doesn't like the terms of gov't sponsored charity, they can go to private charaties, which are probably more difficult to manipulate.

3. I assume most food stamp recipients have less understanding of what's healthy or unhealthy than the average citizen. One big problem I have with government regulations is that they can make top performers perform at an 'average' level and prevent innovation. That's not a problem here, and we can set standards without invading privacy.

Posted by Ryan W. | January 26, 2008 4:09 PM

Okay, I think I've got an answer to my question now.

Your objection had nothing to do with the effectiveness or efficiency of food stamps as a means of fiscal stimulus. It was a gag reflex. You don't like food stamps. (We already knew that you don't like fiscal stimulus.)

Your arguments against food stamps are pretty compelling. Except that they're mostly theoretical and ideological, not based on comparative data.

Do other prosperous, developed countries use food stamps? (Je ne sais pas.) How many do or don't? In aggregate, how do things work out in those two groups?

Posted by Steve Roth | January 26, 2008 4:47 PM

On $3 dollars a day it is very difficult to buy healthy food. Your best bang for the buck in regards to calories are unhealthy and fatty.

That explains it. Gary's never actually been in a grocery store.

Posted by Charlie (Colorado) | January 26, 2008 5:09 PM

In the abstract, I agree that it is stunningly unlikely that the government is smarter at figuring out how "the poor" should spend their money than the individuals themselves. That view is anti-elitist - the opposite of "Marie Antoinette".

However, in many poor families, the decision is whether to buy food or buy drugs or alcohol, and in mom's battle to feed her children instead of her boyfriend's habit, having an EBT instead of cash is helpful.

This reminds me of the recent discovery that "opt out" 401-k plans have much higher participation rates than those that are "opt in". It's interesting to wonder what would happen if EBT were opt out as well. I.e., if you wanted to "cash in" a month's stamps, you could, but you'd have to do something to make it happen (go to an office, etc.), possibly each month. Then we'd know how far off the benefit is from the need.

Posted by Larry | January 26, 2008 5:38 PM

That explains it. Gary's never actually been in a grocery store.

+1

Posted by RW Rogers | January 26, 2008 5:43 PM

If people are genuinely so screwed up that when given enough money to buy what they need, they fail to purchase enough food to sustain life, then what they need is not food stamps, but 24 hour supervision. I'd agree, but who will supervise them? I've seen too many cases of the government being even more irresponsible...

One issue is that government welfare agencies are somehow incapable of handing out the funds more often than once a month - to people who have trouble planning 3 days ahead, let alone 30. If it was all in non-earmarked cash, nearly all the kids would eat well the first week, but not all the way through the month Not that the food stamps/debit card account that can only be spent on "groceries" is a complete solution, either. Beer, cigarettes, and heroin aren't groceries, but Pepsi, pre-cooked packaged meals, and Cheetos are - and cost a whole lot more than good food that requires cooking. It's entirely possible for a family to blow their month's food budget in less than three weeks, although a good cook who understands where to get rice, beans, etc., in bulk could feed the same family for two months on the same money.

Posted by markm | January 26, 2008 6:42 PM

Megan wrote: "It's just that the process is extremely inefficient, and the sale will net much less than the full value of the food stamps."

When I was a grad student, I used to teach night class in Chicago and according to my students, you could trade WIC credits for 85 cents on the dollar at pretty much any mom-and-pop convenience store. It was apparently a pretty liquid market, though the big grocery stores didn't participate.

Posted by mike | January 26, 2008 8:44 PM

I should do a post on this, because it's come up over and over: the move to electronic systems has, as I understand it, substantially changed what used to be a liquid (but as even the people who bring this up admit, fairly heavily discounted) market in food stamps and WIC vouchers.

Posted by Megan McArdle | January 26, 2008 9:00 PM

"I should do a post on this.."--MM

Good idea.

Because, why would it be soo hard to trade the EBT credits, for cashish, through 'straw' purchases?

I mean, if my 'buddy' was going Grocery shopping, and I have an EBT card, why couldn't we work 'a trade', even if I had to be present at POS?

Posted by MEH | January 26, 2008 10:55 PM

I mean, if my 'buddy' was going Grocery shopping, and I have an EBT card, why couldn't we work 'a trade', even if I had to be present at POS?

It can certainly be done, but it's still less fungible than cash or something that can be easily converted into cash, so it's likely to happen less often.

Posted by anony-mouse | January 26, 2008 11:32 PM

Forestgirl and Ryan W. are right about the lack of logical distinction between the mortgage rebate and food stamps. In both cases, the government gives money away to people who are constrained to use that money towards certain kinds of goods. It's no coincidence that these two goods are food and shelter.

in mom's battle to feed her children instead of her boyfriend's habit, having an EBT instead of cash is helpful.

This is an excellent point which goes to the heart of what's missing in so many libertarian economic perspectives: any understanding of how family or other group dynamics, rather than individual preferences, affect spending decisions, both for good and for ill.

Finally, throughout this entire discussion, Megan has still said literally not one word to address the CBO's original central contention: that increasing food stamp grants is simply the fastest and most efficient way to pump government money into the economy, because it reaches recipients fast and is spent quickly.

Posted by brooksfoe | January 27, 2008 2:45 AM

Incidentally, if you still disagree with Megan´s take on food stamps, you are, oficially, an idiot.

Posted by iskndarbey | January 27, 2008 4:19 AM

Re: Disregarding the $3 a day, pretty hard to do but just for instance, food stamps do not cover any fresh fruits. The only vegetable they cover is carrots, non-baby carrots.

Huh? The above may be true of WIC coupons (I don't know) but food stamps can be used to buy any non-prepared food items rung up under the grocery key of a cash register.

Posted by Jonf | January 27, 2008 9:07 AM

Gary Denton is in fact confusing food stamps and WIC.
The latter is a separate program designed to supplement the diets of young children and nursing mothers who are poor and at some medical risk, and is in addition to food stamp benefits.

WIC vouchers can only be used on some very specific foods, such as formula, milk, juice, eggs, and peanut butter, plus carrots and tuna for nursing mothers. The goal isn't so much to provide a food budget for poor families as to remedy specific nutritional deficiencies, such as a lack of vitamins A and C.

Posted by Atlee Breland | January 27, 2008 11:54 AM

I grew up with parents who needed supervision (that is, we kids didn't eat every day, and some of the days we did eat the only meal was free lunch at the public school). In spite of having welfare, government surplus food, and food stamps. This was in the 1960s and early 1970s.

I've always wanted to open cafeterias for kids only--free meals and snacks but they have to be eaten on the premises (so the parents won't send the kids in to get food for the adults).

Posted by Kai Jones | January 27, 2008 6:11 PM

Megan

I think you're missing the point of why food stamps were included in the (initial) stimulus package. It is not to tell poor people what to do with their money or to increase spending on food, it is to increase spending in general. Everyone, including homeless people, eats food. If you only have a small amount of money, you will spend it on food. If you have more, you spend it on shelter, clothes, and whatever else you want. Food stamps take care of the most basic part, so that more money will be spent elsewhere. Poor people are poor because they don't have enough money to get by, and food stamps increase their purchasing ability pumping money into the economy, giving it to business owners, services, manufacturers, etc.

Posted by David | January 27, 2008 6:26 PM

Gary Denton is in fact confusing food stamps and WIC.

Gary? Never! He's the guy who identifies other people's ignorance and then castigates them for it. He wouldn't make that kind of mistake, I'm sure of it!

Posted by anony-mouse | January 27, 2008 7:09 PM

Economically giving you some of your own money back, and just giving you a handout might have very similar, even possibly identical effects but that doesn't mean they are the same thing.

As for "and thereby forcing me to pay higher taxes to cover the shortfall"

No homeowners don't force you to pay higher taxes, the government does. There isn't a specific right level of tax income, where any reduction is a shortfall, there is a government that decides what to spend and then charges tax payers for most of it (borrowing the rest, which in the long run means charging tax payers anyway).

The homeowner isn't forcing you to pay anything, at best he is lucky enough that the government decides it will take a bit less from him since he jumped through one of the hoops the government sets up to slightly reduce what it grabs. But he still isn't getting money from the government, the net flow is the other way.

Posted by Tim Fowler | January 27, 2008 7:14 PM

...you get money for doing something that you presumably would have done anyway, which is buying a house.

In an effort not to duplicate previous comments, I'll simply point out this line. Unless you think the poor wouldn't buy food anyway, this provides no cover whatsoever.

Posted by Brad L | January 27, 2008 8:15 PM

Economically, these things are identical; there is no difference between giving you a tax credit (and thereby forcing me to pay higher taxes to cover the shortfall) or giving you money.

Economically, your sneaking into my wallet and stealing $50 is identical to my giving you $50. That doesn't make it the same thing.

Posted by Doug | January 28, 2008 2:57 AM

do I get to attach strings to the money you get from the government?

Do you personally? No, you don't -- you are not the legislative branch.

Do "we"? Of course we do!

As for your notion that some people need supervision 24x7... well, yes, many people do. That's part of the function of prisons. But this is costly. It would be even costlier to "supervise" people who are free to move around. Basically you're talking about having a government-provided personal assistant (with police backup) for every incompetent person.

I'm not willing to pay for that. Are you?

Unless you are considering imprisoning an even larger proportion of the poor than is already imprisoned, and for no cause beyond incompetence, you might consider ideas for helping incompetent people survive in the general population. Yes, this means nanny state measures like food stamps.

Posted by Leonard | January 28, 2008 11:27 AM

"...if people are genuinely so screwed up that when given enough money to buy what they need, they fail to purchase enough food to sustain life, then what they need is not food stamps, but 24 hour supervision." And, who will take that on? Most poor neighborhoods have at least one store that will give cash for food stamps at a 2-1 exchange. Illegal, but with those margins its worth it for some. And, in some of those same neighborhoods, you can sell them at the same rate for drugs- dealers eat well, you can buy a lot of food with 20 'clients' foodstamps. I'd guess it'd be better to just give cash out, in hopes that SOME of it might be used for food.

Posted by Bill Beyer | January 28, 2008 6:49 PM

From Megan's article "If people are genuinely so screwed up that when given enough money to buy what they need, they fail to purchase enough food to sustain life, then what they need is not food stamps, but 24 hour supervision."

There really are people who have difficulty budgeting their money well enough to set aside enough money for food every month. My wife's great uncle was recently put in a nursing home after a bad heart attack, but before that all his monetary affairs were handled by his older brother. He isn't the brightest person in the world, in part because he got a very high fever as a young child that caused some brain damage. He lives on social security and food stamps. He turned this money over to his brother to keep track of. With his brother's aid the food stamps actually purchase plenty of food for the Great Uncle, and the rest is spent on food for his brother and his wife. In return for the extra food stamp money which he cannot use since the money is now being spent wisely, the brother gives the Great Uncle spending cash to go with his food. When he was trying to manage the money himself he often made poor purchase choices - for example buying a large # of frozen dinners at the beginning of the month, and not having enough money for food by the end of the month (since frozen dinners are expensive) With better management the social security and food stamp money is enough for plenty of good food as well as snacks, cigarettes, insurance, and spending cash.

Many other people are like my wife's great uncle and have genuine difficulty budgeting their money over the course of a month. If Megan thinks they all need 24 hr supervision then be prepared for the mother of all nanny states. The present system attempts to allow these people to maintain control over their own lives, and is certainly cheaper than 24/7 monitoring. People are allowed to screw up from time to time, and some will screw up more than others.

Posted by Eric | January 29, 2008 9:04 AM

Mrs.McArdle, I am 18 years old and my family receves food stamps. My father is in a nursing home, and it's my sister as I at home because my mother is gone.
Are you telling me that I deserve to starve for the mistakes that other people make?

Posted by Marie | February 7, 2008 9:38 AM

Mrs.McArdle, I am 18 years old and my family receves food stamps. My father is in a nursing home, and it's my sister as I at home because my mother is gone.
Are you telling me that I deserve to starve for the mistakes that other people make?

Posted by Marie | February 7, 2008 9:38 AM

Mrs.McArdle, I am 18 years old and my family receves food stamps. My father is in a nursing home, and it's my sister as I at home because my mother is gone.
Are you telling me that I deserve to starve for the mistakes that other people make?

Posted by Marie | February 7, 2008 9:38 AM

Mrs.McArdle, I am 18 years old and my family receves food stamps. My father is in a nursing home, and it's my sister as I at home because my mother is gone.
Are you telling me that I deserve to starve for the mistakes that other people make?

Posted by Marie | February 7, 2008 9:38 AM